In a move that will allow it to shield executive compensation and get Congress off its back, the NFL announced that it will drop its status as a nonprofit tax-exempt organization. One nonprofit tax expert shares what that means, and how it could affect other 501(c)(6) associations.

Somewhere, retired Republican Senator Tom Coburn has a smile as wide as the panhandle of Oklahoma. That’s because just months after he resigned from his seat, Coburn—and the rest of the country—was met with the following headline Tuesday afternoon on Bloomberg.com: “NFL Will End Its Tax-Exempt Status, Goodell Tells Owners.”

Coburn, who was famous for his annual “Wastebook” that tracked various federal projects that the he deemed “wasteful,” finally got at least part of what he’d spent a majority of his political career aiming for.

In a letter to the league’s 32 team owners, NFL Commissioner Roger Goodell said that a study by the league’s finance committee determined that a change in tax status would not alter the way the league functions or operates, though it would help to remove a major thorn in the league’s side. Thus, the NFL’s Management Council voted to voluntarily drop its Section 501(c)(6) tax-exempt status.

“The effects of the tax exempt status of the league office have been mischaracterized repeatedly in recent years. The fact is that the business of the NFL has never been tax exempt,” Goodell said in the letter. “Every dollar of income generated through television rights fees, licensing agreements, sponsorships, ticket sales, and other means is earned by the 32 clubs and is taxable there. This will remain the case even when the league office and Management Council file returns as taxable entities, and the change in filing status will make no material difference to our business. As a result, the Committees decided to eliminate this distraction.”

That distraction, according to Bloomberg, equates to about $109 million in lost tax breaks over the next decade.

“This decision isn’t going to help offset the national deficit next year,” said Jeffrey S. Tenenbaum, chair of the nonprofit organizations practice at Venable law firm.

So why do it?

Aside from the outside pressures on the NFL, Tenenbaum said, the decision was likely driven by a desire to no longer be forced to disclose executive compensation on the Form 990—the same reason Major League Baseball dropped its tax-exempt status back in 2007. The reason for the NFL’s delay had to do with a unique loan structure the league setup to help its teams fund new stadium projects that had favorable repayment programs.

“The concern they had—and probably still have, but determined that the benefits outweigh the costs—is that, as more of these monies get repaid in the later years that they’ll be taxed on those returns on the interest of the loans,” explained Tenenbaum. “That, according to their tax lawyer who I’ve talked to, is the primary reason why they didn’t make this change up until now.”

And for nonprofit tax lawyers like Tenenbaum, the hope now is that Congress will back off its pursuit of revoking other sports leagues’ tax-exempt status.

“It’s hard to make the argument that the NFL furthers the entire sport of football in the same way that the US Tennis Association furthers the sport of tennis throughout the country,” he said. “Hopefully this will take the sting out of this issue. Even though the bills around this have been focused on all tax-exempt 501(c)(6) sports leagues, the real target had been the NFL. We’re hoping that 501(c)(6) status is a little safer today than it was yesterday for all of those trade and professional associations out there.”

Former Sen. Tom Coburn, a noted critic of the NFL's tax-exempt status. (Chip Somodevilla/Getty Images)